In-depth Analysis: The Rise Spiral of USD and DAI and Its Potential Impact

Recently, the total issuance of USDe has shown explosive growth, surging from $2.4 billion to $3.8 billion within a month, with a monthly increase of over 58%. The fundamental reason for this phenomenon lies in the bullish sentiment in the market after Bitcoin broke new highs, driving up funding rates and subsequently increasing the staking yield of USDe. Although it has somewhat retreated compared to a few days ago, the annualized yield of USDe on November 26 still remains at a high level of around 25%.

At the same time, MakerDAO has become an unexpected beneficiary of this wave of growth. Currently, MakerDAO's daily revenue has risen by more than 200% compared to a month ago, hitting an all-time high. This significant rise is closely related to the development of USDe. First, the high staking yield of USDe has created enormous lending demand for sUSDe and PT assets. Data shows that on the Morpho platform alone, the total scale of borrowing DAI with sUSDe and PT as collateral has reached approximately $570 million, with a borrowing utilization rate exceeding 80% and an annualized deposit yield as high as 12%. Over the past month, MakerDAO has seen a loan increase of over $300 million on the Morpho platform through the D3M module.

In addition to direct impacts, the borrowing demand for sUSDe and PT has also indirectly driven up the usage rate of DAI in other channels. For example, the deposit interest rate for DAI on the Sparkfi platform has reached 8.5%. The balance sheet of MakerDAO shows that the total amount of DAI loans issued to Morpho and Spark through the D3M module has reached $2 billion, accounting for nearly 40% of its asset side. These two projects alone have generated $203 million in annualized fees for MakerDAO, contributing $550,000 in daily revenue, which accounts for 54% of MakerDAO's total annualized fees.

The growth path of USDe has become clearly visible: the optimistic sentiment brought by Bitcoin's new highs has pushed up the funding rates, thereby increasing the staking yield of USDe. MakerDAO, with its complete and highly liquid funding chain and the "central bank attributes" of the D3M module, has become an important supporter of USDe's growth. Morpho plays the role of a "lubricant" in this process. These three protocols form the core of the growth, while peripheral protocols like AAVE, Curve, and Pendle also benefit from the growth of USDe to varying degrees. For example, the borrowing utilization rate of DAI on the AAVE platform exceeds 50%, and the total deposits of USDS are close to 400 million USD; the USDe/ENA related trading pairs rank second, fourth, and fifth in Curve's trading volume, and occupy the first and fifth positions in Pendle's liquidity ranking. Tokens like Curve, CVX, ENA, and MKR have also achieved a monthly increase of over 50%.

In this growth spiral, nearly all participants benefit. Leverage miners and lenders of USDe can achieve high but volatile returns through leverage, while DAI depositors enjoy higher and relatively stable yields. Low-risk arbitrageurs earn through staking Warp BTC, ETH LST minting, or borrowing DAI to capture spread, while advanced players gain excess returns through DeFi protocol combinations, and the protocols themselves reap higher TVL, income, and token prices.

However, whether this growth model can be sustained depends on whether the interest rate spread between USDe and DAI will exist for the long term. Since DAI provides a relatively predictable monetary policy, the focus of the issue is mainly on USDe. Influencing factors include: whether the optimistic sentiment in the bull market can be maintained, whether Ethena can achieve a higher APY allocation efficiency through improvements in its economic model and an increase in market share, and the market competition from competitors (such as the recent interest-bearing stablecoin strategy launched by a certain trading platform).

Accompanying the rise is concern over the security of D3M. D3M allows for the direct dynamic generation of DAI tokens without traditional collateral, and some argue that this falls under "unanchored printing." However, from a balance sheet perspective, the DAI minted by D3M is collateralized by sDAI. Considering that sDAI is ultimately lent out as USDe, the collateral effectively becomes sUSDe or PT with an LTV exceeding 110%, ultimately equating to "a long and short synthetic asset position with an LTV ratio exceeding 110%."

Based on this, D3M will not directly cause DAI to become an under-collateralized stablecoin, but it does increase some risks:

1. A high proportion of the D3M module may cause DAI to become a "shadow stablecoin" again, similar to how the previous PSM turned it into a "shadow USDC".
2. The operational risk, contract risk, and custody risk of Ethena may be transmitted to DAI, and intermediaries like Morpho may further increase the risk.
3. May reduce the overall collateralization rate of DAI.

Overall, the rise of USDe and DAI's growth spiral has brought significant gains, but it is also accompanied by potential risks, requiring market participants to remain vigilant and closely monitor the long-term sustainability of this pattern.